TaxTMI 
TaxTMI 
2006 (2) TMI 669
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....6, was allowed. 3. The respondents herein filed a suit against the appellant, inter alia, for a declaration that the transaction dated 24.6.1977, although ostensibly expressed in the shape of a deed of sale, was in fact a transaction of usufructuary mortgage and for a further declaration that the said transaction stands redeemed under Section 12 of the Bihar Money Lenders Act, 1974. The respondents herein further sought for a decree directing the appellant to deliver vacant possession of the suit land to them, failing which they might be put back in possession thereof through the process of Court. The respondents averred that they were occupancy raiyats of the suit land. The appellant herein allegedly gave an advance of Rs. 3,000/- on their executing a deed of usufructuary mortgage in respect of the suit land. However, allegedly the appellant asked them to execute a deed of sale on the ground that he did not possess any money lending licence, whereupon indisputably such a deed was executed on 24.6.1977. The appellant in turn executed a registered deed of agreement in his favour whereby and where under the respondent agreed to execute a deed of reconveyance on his receipt of the ....
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....ation the admissions made by the parties to the aforementioned effect, in view of the decision reported in AIR 1988 SC 1074." 8. The High Court in its judgment came to the conclusion that the recital of both the documents spelt out that the real intention of the parties was that the transaction was to be one of mortgage holding that the said deed of mortgage was executed by the respondents in favour of the appellant for the purpose of securing a loan of Rs. 3,000/-. It was also held that the agreement for sale dated 24.6.1977 did not have the efficacy to control the import of the recitals made in the said conveyance dated 24.6.1977. 9. Mr. P.S. Mishra, learned Senior Counsel appearing on behalf of the appellant raised a short question in support of this appeal. It was contended that having regard to the provisions of Section 58(C) of the Transfer of Property Act, the High Court committed a manifest error in holding the transaction to be one of mortgage as the said plea could not have been raised having regard to the provisions of Sections 91 and 92 of the Indian Evidence Act. It was further contended that the order dated 22.3.1979 passed by the Civil Court in Miscellaneous Ca....
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....it was stated therein that the said deed of sale was executed on the Baibulbafa condition. It was also stated that the 'vendees' agreed that the 'vendor' or his successors or heirs whenever would pay the consideration amount of Rs. 3,000/- within 23 months from that date, i.e., upto the month of June, 1978, then he would execute the deed of sale pertaining to the said property. 13. The learned Trial Court as also the learned First Appellate Court arrived at a concurrent finding that the said transaction did not constitute a mortgage but thereby the respondents executed a deed of sale in favour of the appellant and the appellant in turn executed an agreement for reconveyance in their favour. 'Baibulwafa' was held to be a deed of conditional sale with a contract of repurchase and not a mortgage with conditional sale. On the aforesaid findings it was categorically held that a suit for declaration that the said transactions in effect and substance constitute a mortgage, was not maintainable. 14. A deed as is well known must be construed, having regard to the language used therein. We have noticed hereinbefore that by reason of the said deed of sale, the ri....
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.... deed pertaining to the property mentioned in column 5 of this deed in favour of the vendee or his legal heirs or successor." 17. It is of some significance to note that therein the expressions "vendor", "vendee", "sold" and "consideration" have been used. These expressions together with the fact that the sale deed was executed to be within a period of 23 months, i.e., upto June, 1978, evidently the expression 'Vaibulwafa' as a condition was loosely used. 18. Furthermore, the agreement was also executed for a fixed period. The other terms and conditions of the said agreement (Ekrarnama) also clearly go to show that the parties understood the same to be a deed of reconveyance and not mortgage or a conditional sale. The terminology 'Vaibulwafa' used in the agreement does not carry any meaning. It could be either 'Bai-ul-wafa' or 'Bai-bil-wafa'. 19. It will bear repetition to state that with a view to ascertain the nature of a transaction the document has to be read as a whole. A sentence used or a term used may not be determinative of the real nature of transaction. Baibulwafa, it was held by the trial court connotes only an agreement for s....
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.... become the legitimate progeny of the law of evidence. For the purpose of specific varieties of jural effects sale, contract etc. there are specific requirements varying according to the subject. On the contrary there are also certain fundamental elements common to all and capable of being generalised. Every jural act may have the following four elements: (a) the enaction or creation of the act; (b) its integration or embodiment in a single memorial when desired; (c) its solemnization or fulfilment of the prescribed forms, if any; and (d) the interpretation or application of the act to the external objects affected by it." 22. Section 58 (c) of the Transfer of Property Act, 1882 defines mortgage by conditional sale in the following terms: "(c) Mortgage by conditional sale.- Where, the mortgagor ostensibly sells the mortgaged property- on condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to the seller: ....
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....v. Nilkanth Dhondiba Chavan (Dead) by Lrs. And Another [(2005) 6 SCC 243], wherein of us was a party, this Court held : "21. There exists a distinction between mortgage by conditional sale and a sale with a condition of repurchase. In a mortgage, the debt subsists and a right to redeem remains with the debtor; but a sale with a condition of repurchase is not a lending and borrowing arrangement. There does not exist any debt and no right to redeem is reserved thereby. An agreement to sell confers merely a personal right which can be enforced strictly according to the terms of the deed and at the time agreed upon. Proviso appended to Section 58(c), however, states that if the condition for retransfer is not embodied in the document which effects or purports to effect a sale, the transaction will not be regarded as a mortgage. (See Pandit Chunchun Jha v. Sk. Ebadat Ali, Bhaskar Waman Joshi v. Narayan Rambilas Agarwal, K. Simrathmull v. S. Nanjalingiah Gowder, Mushir Mohammed Khan and Tamboli Ramanlal Motilal.)" 27. The High Court relied upon Smt. Indira Kaur & Ors. v. Sheo Lal Kapoor [(1988) 2 SCC 488] therein the court took into consideration the factors adumbrated therei....
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....ment to reconvey the property will not ipso facto lead to the conclusion that the sale is nominal and in view of the stand of Defendant 8, as also of the fact that the property worth Rs. 700 has been purportedly sold for Rs. 400, we are of the considered opinion that the sale deed dated 1-12-1965 did not convey any title to Defendant 8. It is well settled by a catena of decisions that the vendor cannot convey to the vendee better title than she herself has." 29. As of fact, it was held therein that the sale deed in question was not a real sale deed but was by way of a surety. In that case, furthermore, the defendant categorically admitted that the plaintiff had taken loan. It is in that situation, the transaction was held to be a mortgage. Apart from it, there were other circumstances which led the court to arrive at the said conclusion. The said decision, therefore, cannot have any application in the instant case. 30. The question which now arises for consideration is as to whether the aforementioned order dated 22.3.1979 passed in Misc. Case No. 14/78 would operate as res judicata. Section 83 of the Transfer of Property Act reads as under: "Power to deposit in Cour....
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....47]. By reason of such deposit the status of the parties is not altered. For filing a suit for redemption by the mortgager, deposit under Section 83 is not a precondition. 32. It is well-known that the function of a court in terms of Section 83 Transfer of Property Act is procedural in nature. For attracting the principles of res judicata, the submissions of Mr. Hansaria is that the court of the Munsif was a court exercising limited jurisdiction while entertaining an application under Section 83 of the Transfer Property Act and the decision of such a court of limited jurisdiction would also operate as res judicata. Strong reliance has been placed by Mr. Hansaria on Sulochana Amma v. Narayanan Nair[ (1994) 2 SCC 14]. He submitted that in that case a suit was filed before a court of limited pecuniary jurisdiction and in view of the decision thereon, explanation VIII to Section 11 of the Code of Civil Procedure was held to be attracted. 33. In Rajendra Kumar v. Kalyan (Dead) by Lrs. [(2000) 8 SCC 99] this Court merely held that the expression 'court of limited jurisdiction' is of wide amplitude. The Court made a distinction between a procedural statute and a substantive ....
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....urchase are embodied in separate documents, then the transaction cannot be a mortgage whether the documents are contemporaneously executed or not." Therefore, it is clear that what was involved in this case was the sale followed by a contemporaneous agreement for re- conveyance of the property. Such an agreement to re- convey is an option contact and the right has to be exercised within the period of limitation provided therefor. It has also been held that in such an agreement for re- conveyance, time is of the essence of the contract. The plaintiffs not having sued within time for re-conveyance, it would not be open to them to seek a declaration that the transaction of sale entered into by them construed in the light of the separate agreement for re-conveyance executed by the purchaser, should be declared to be a mortgage. Such a suit would also be hit by Section 91 of the Evidence Act, subject to the exceptions contained in Section 92 of that Act. 40. Learned Counsel for the respondents vehemently contended that the permission granted to the plaintiffs to make a deposit under Section 83 of the Transfer of Property Act involved an adjudication that there was a subsisting mortga....